Meta Platforms Inc. delivered a financial report that initially appeared stellar, yet triggered a dramatic market selloff. The social media giant’s stock experienced its most severe single-day decline since October 2022, plummeting over 11% as investors reacted with alarm to the company’s ambitious artificial intelligence expenditure plans.
Strong Fundamentals Overshadowed by Spending Concerns
The company’s third-quarter performance demonstrated remarkable strength in several key areas. Revenue reached $51.24 billion, representing a 26% year-over-year increase that marked Meta’s strongest growth rate in eighteen months. This figure substantially exceeded analyst projections, as did the company’s adjusted earnings per share.
However, these positive results were dramatically offset by a substantial tax provision of $15.9 billion, causing earnings per share to collapse. This development prompted both algorithmic traders and headline-sensitive investors to rapidly exit positions, completely overshadowing the company’s robust advertising business performance.
Unprecedented Capital Expenditure Forecast
What truly unsettled markets was Meta’s revised investment guidance for 2025. The company elevated its capital expenditure forecast to a staggering range of $70 to $72 billion, with the majority allocated toward expanding AI infrastructure and constructing new data centers.
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More concerning to analysts was management’s warning regarding 2026, where they projected a “significantly larger” increase in capital spending. These billions are directed toward developing what the company describes as “superintelligence” – an ambitious project that could substantially pressure profit margins for the foreseeable future.
Continued Losses in Virtual Reality Division
As Meta channels enormous resources into artificial intelligence, its Reality Labs segment continues to generate significant losses. The metaverse division reported an additional $4.4 billion deficit during the third quarter, demonstrating that Zuckerberg’s vision of a virtual universe remains distant from profitability.
The convergence of escalating AI investments and persistent metaverse losses presents a substantial challenge to Meta’s overall profitability. Investors are increasingly questioning when these massive expenditures will eventually generate returns, creating tension between the company’s long-term ambitions and short-term financial performance expectations.
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